UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
Date of Report: August 6, 2015
Commission file number 1- 33198
TEEKAY OFFSHORE PARTNERS L.P.
(Exact name of Registrant as specified in its charter)
4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40- F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).
Yes ¨ No x
Item 1 — Information Contained in this Form 6-K Report
Attached as Exhibit 1 is a copy of an announcement of Teekay Offshore Partners L.P. dated August 6, 2015.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TEEKAY OFFSHORE PARTNERS L.P. | ||||||
| By: |
Teekay Offshore GP L.L.C., its general partner | |||||
| Date: August 6, 2015 |
By: |
/s/ Peter Evensen | ||||
| Peter Evensen | ||||||
| Chief Executive Officer and Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
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TEEKAY OFFSHORE PARTNERS REPORTS
SECOND QUARTER 2015 RESULTS
Highlights
| • | Generated distributable cash flow of $58.3 million in the second quarter of 2015, an increase of 45 percent from the second quarter of 2014. |
| • | Declared second quarter 2015 cash distribution of $0.5384 per common unit; management intends to recommend to the Partnership’s Board of Directors a distribution increase of four percent commencing in the third quarter of 2015. |
| • | Second quarter 2015 cash distribution coverage ratio of 1.06x compared with 0.79x for the same quarter of the prior year. |
| • | Completed and fully financed the $1.26 billion accretive acquisition of the Knarr FPSO on July 1, 2015. |
| • | The Partnership’s first UMS, the Arendal Spirit, commenced its three-year charter contract in June 2015. |
| • | In June 2015, was awarded strategic contract to provide shuttle tanker services to the East Coast of Canada; ordered three shuttle tanker newbuildings to service the contract. |
| • | In June 2015, the contract period of the Petrojarl Varg FPSO was extended for an additional three years. |
| • | Total liquidity of approximately $328 million as at August 1, 2015. |
Hamilton, Bermuda, August 6, 2015 – Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO), today reported the Partnership’s results for the quarter ended June 30, 2015. During the second quarter of 2015, the Partnership generated distributable cash flow(1) of $58.3 million, compared to $40.1 million in the same period of the prior year. The increase in distributable cash flow was primarily due to the acquisition of five long-distance towing and offshore installation vessels during the first half of 2015, the commencement of the Arendal Spirit Unit for Maintenance and Safety (UMS) charter contract in early-June 2015, the commencement of the Suksan Salamander floating storage and offtake (FSO) unit charter contract in August 2014, an increase in revenues from the floating production, storage and offloading (FPSO) fleet due to higher production and charter rates, and lower vessel operating expenses. These increases were partially offset by the sale of the two older shuttle tankers, the Navion Norvegia in October 2014 (which is being converted for the Partnership’s 50 percent-owned Libra FPSO project) and the Navion Svenita in March 2015.
On July 2, 2015, the Partnership declared a cash distribution of $0.5384 per unit for the quarter ended June 30, 2015. The cash distribution will be paid on August 14, 2015 to all unitholders of record on July 14, 2015.
| (1) | Distributable cash flow is a non-GAAP financial measure used by certain investors to measure the financial performance of the Partnership and other master limited partnerships. Please see Appendix B for a reconciliation of distributable cash flow to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP). |
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Teekay Offshore Partners L.P. Investor Relations Tel: +1 604 844-6654 www.teekayoffshore.com
4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM 08, Bermuda
CEO Commentary
“This was a successful quarter for Teekay Offshore as we commenced a new charter and completed previously announced acquisitions, which helped the Partnership generate strong cash flow again this quarter and resulted in a coverage ratio of 1.06,” stated Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC. “On July 1st, we also completed the purchase of the Knarr FPSO, the Partnership’s largest acquisition to date, which along with our other recent growth initiatives, are expected to drive further distributable cash flow increases in future quarters. This includes our first UMS, which commenced its three-year charter with Petrobras in Brazil in early-June, and our recently acquired towage vessels, which are off to a strong start with high utilization during the second quarter. As a result of these growth initiatives, we intend to recommend to the Partnership’s Board of Directors that Teekay Offshore increase its cash distribution by four percent, commencing in the third quarter of 2015.”
“I am also pleased to report that during the past quarter the Partnership secured new business in our offshore logistics segment, which expands our franchise into a promising new offshore oil production market,” Mr. Evensen continued. “In June, we secured strategic long-term contracts with a group of strong counterparties to be the sole provider of shuttle tanker services in the growing Eastern Canada offshore market, which enhances our expected distributable cash flow growth profile beyond 2017”.
Mr. Evensen added, “Teekay Offshore’s cash flows are stable and growing, supported by a large and diversified portfolio of long-term, fee-based contracts of $8.4 billion in forward revenues with an average remaining contract duration of over five years and no direct commodity price exposure. Despite the current volatility in the energy markets, the long-term fundamentals of the offshore oil production market remain attractive. With a strong pipeline of contracted growth projects and access to competitive bank financing and multiple capital markets, we believe the Partnership is well-positioned for further distributable cash flow growth.”
Summary of Recent Events
Completed Acquisition of Knarr FPSO
In June 2011, Teekay Corporation entered into a contract with BG Norge Limited (BG) to provide a harsh weather FPSO unit to operate in the North Sea. The contract is being serviced by a newbuilding FPSO unit, the Petrojarl Knarr (Knarr), which commenced its charter contract with BG in March 2015 on partial charter rate. In June 2015, the Knarr completed its operational testing and commenced its full charter rate and on July 1, 2015, the Partnership completed the acquisition of the Knarr from Teekay Corporation. The purchase price for the Knarr, which is based on a fully built-up cost of approximately $1.26 billion, was fully financed through the assumption of an existing $745 million long-term debt facility, $300 million of common equity units issued to Teekay Corporation, and $250 million of convertible preferred units issued in a private placement.
Delivery of Arendal Spirit UMS and Deferred Delivery of UMS Newbuildings
In August 2014, the Partnership acquired Logitel Offshore Holding AS (Logitel), a Norway-based company focused on the high-end floating accommodation market and providing units for maintenance and safety. Prior to being acquired by the Partnership, Logitel secured a three-year fixed-rate time-charter contract, plus extension options, with Petrobras in Brazil for the first UMS, the Arendal Spirit, which commenced its three-year charter contract on June 7, 2015.
During the second quarter of 2015, the Partnership exercised its options to defer delivery of its second UMS newbuilding by up to one year, and the delivery and all related construction work by 120 days for its third UMS. The Partnership expects to secure charter contracts for these newbuildings prior to their respective current scheduled deliveries in the third quarter of 2016 and the second quarter of 2017.
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Awarded Strategic East Coast Canada Shuttle Tanker Contract
In early-June 2015, the Partnership entered into new long-term contracts with a group of companies that includes Chevron Canada, Exxon Mobil, Husky Energy, Mosbacher Operating Ltd., Murphy Oil, Nalcor Energy, Statoil and Suncor Energy, to provide shuttle tanker services in the East Coast of Canada. These 15-year contracts, plus extension options, are initially being serviced by three third-party owned shuttle tankers currently operating in the East Coast of Canada, which are in-chartered by the Partnership. One of these vessels is expected to be replaced by one of the Partnership’s existing shuttle tankers, the Navion Hispania, during the third quarter of 2015. In connection with the contract award, the Partnership has entered into shipbuilding contracts to construct three, Suezmax-size, dynamic positioning 2 (DP2) shuttle tanker newbuildings with a South Korean shipyard for a fully built-up cost of approximately $370 million, with an option to order one additional vessel should a fourth vessel be required. The three ordered vessels are expected to be delivered in the fourth quarter of 2017 through the first half of 2018.
Petrojarl Varg FPSO Contract Extension
In June 2015, the charterer of the Petrojarl Varg FPSO unit, Talisman Energy Norge AS, exercised an option to extend the contract period of the unit for an additional three years through June 30, 2019. The charterer has one remaining option to extend the contract period for a further three years.
Delivery of Towage Vessels
In late-October 2014, the Partnership, through its wholly-owned subsidiary, ALP Maritime Services B.V. (ALP), agreed to acquire six, modern on-the-water, long-distance towing and offshore installation vessels for approximately $220 million. Five vessels were delivered during the first half of 2015 and the sixth vessel delivered in early-July 2015. The vessels were built between 2006 and 2010 and are all equipped with DP capabilities, allowing them to be used for towage, station-keeping, installation and decommissioning of large floating objects such as FPSO units and floating drilling rigs.
Financial Summary
The Partnership reported adjusted net income attributable to the partners(1) of $39.5 million for the quarter ended June 30, 2015, compared to $23.8 million for the same period of the prior year. Adjusted net income attributable to the partners excludes a number of specific items that had the net effect of increasing net income by $64.8 million and decreasing net income by $29.2 million for the quarters ended June 30, 2015 and 2014, respectively, primarily relating to unrealized gains and losses on derivative instruments, as detailed in Appendix A to this release. Including these items, the Partnership reported, on a GAAP basis, net income attributable to the partners of $104.2 million for the second quarter of 2015, compared to net loss attributable to the partners of $5.5 million in the same period of the prior year. Net revenues(2) increased to $235.0 million for the second quarter of 2015, compared to $215.1 million in the same period of the prior year.
Adjusted net income attributable to the partners for the three months ended June 30, 2015 increased from the same period in the prior year mainly due to: the acquisition of five long-distance towing and offshore installation vessels during the first half of 2015; the Arendal Spirit UMS starting its charter contract in early-June 2015; the Suksan Salamander FSO commencing its charter contract in August 2014; an increase in revenues from the FPSO fleet due to higher production and charter rates; and a reduction in operating expenses. These increases were partially offset by the sale of the Navion Norvegia in October 2014 and the sale of the Navion Svenita in March 2015.
For accounting purposes, the Partnership is required to recognize, through the consolidated statements of income (loss), changes in the fair value of derivative instruments as unrealized gains or losses. This revaluation does not affect the economics of any hedging transactions nor does it have any impact on the Partnership’s actual cash flows or the calculation of its distributable cash flow.
| (1) | Adjusted net income attributable to the partners is a non-GAAP financial measure. Please refer to Appendix A included in this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP and information about specific items affecting net income that are typically excluded by securities analysts in their published estimates of the Partnership’s financial results. |
| (2) | Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please refer to Appendix C included in this release for a reconciliation of this non-GAAP measure to the most directly comparable financial measure under GAAP. |
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Operating Results
The following table highlights certain financial information for Teekay Offshore’s six segments: the Shuttle Tanker segment, the FPSO segment, the FSO segment, the Conventional Tanker segment, and two new segments, the Towage segment and the UMS segment (please refer to the “Teekay Offshore’s Fleet” section of this release above and Appendices C through F for further details).
| Three Months Ended June 30, 2015 (unaudited) |
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| (in thousands of U.S. dollars) |
Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
UMS Segment(1) |
Total | |||||||||||||||||||||
| Net revenues(2) |
113,925 | 86,246 | 14,075 | 7,598 | 9,512 | 3,686 | 235,042 | |||||||||||||||||||||
| Vessel operating expenses |
(31,125 | ) | (33,556 | ) | (6,921 | ) | (1,514 | ) | (3,696 | ) | (1,123 | ) | (77,935 | ) | ||||||||||||||
| Time-charter hire expense |
(10,762 | ) | — | — | — | — | — | (10,762 | ) | |||||||||||||||||||
| Depreciation and amortization |
(26,795 | ) | (19,844 | ) | (2,974 | ) | (1,676 | ) | (2,174 | ) | (401 | ) | (53,864 | ) | ||||||||||||||
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| CFVO from consolidated vessels(3) |
63,853 | 43,193 | 7,945 | 5,577 | 4,979 | 1,924 | 127,471 | |||||||||||||||||||||
| CFVO from equity accounted vessel(4) |
— | 6,629 | — | — | — | — | 6,629 | |||||||||||||||||||||
| Total CFVO(3)(4) |
63,853 | 49,822 | 7,945 | 5,577 | 4,979 | 1,924 | 134,100 | |||||||||||||||||||||
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| Three Months Ended June 30, 2014 (unaudited) |
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| (in thousands of U.S. dollars) |
Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
Total | ||||||||||||||||||||||
| Net revenues(2) |
112,129 | 83,984 | 11,524 | 7,412 | 97 | 215,146 | ||||||||||||||||||||||
| Vessel operating expenses |
(39,715 | ) | (39,472 | ) | (7,532 | ) | (1,465 | ) | — | (88,184 | ) | |||||||||||||||||
| Time-charter hire expense |
(4,975 | ) | — | — | — | — | (4,975 | ) | ||||||||||||||||||||
| Depreciation and amortization |
(27,378 | ) | (18,186 | ) | (1,298 | ) | (1,612 | ) | — | (48,474 | ) | |||||||||||||||||
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| CFVO from consolidated vessels(3) |
61,664 | 33,606 | 3,966 | 5,635 | (2,097 | ) | 102,774 | |||||||||||||||||||||
| CFVO from equity accounted vessel(4) |
— | 7,135 | — | — | — | 7,135 | ||||||||||||||||||||||
| Total CFVO(3)(4) |
61,664 | 40,741 | 3,966 | 5,635 | (2,097 | ) | 109,909 | |||||||||||||||||||||
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| (1) | The Partnership acquired 100 percent of the outstanding shares of Logitel during the third quarter of 2014 and operations began in the second quarter of 2015. |
| (2) | Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please refer to Appendix C, included in this release for a reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure. |
| (3) | Cash flow from vessel operations (CFVO) from consolidated vessels represents income from vessel operations before depreciation and amortization expense, write-down of vessels and amortization of deferred gains, and includes the realized gains and losses on the settlement of foreign exchange forward contracts and adjustments for direct financing leases to a cash basis. CFVO is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. Please refer to Appendix E included in this release for a description and reconciliation of this non-GAAP measure to the most directly comparable GAAP financial measure. |
| (4) | CFVO from equity accounted vessel represents the Partnership’s proportionate share of CFVO from its equity-accounted vessel, the Cidade de Itajai FPSO unit. Please see Appendix F for a description and reconciliation of CFVO from equity accounted vessel (a non-GAAP measure) as used in this release to the most directly comparable GAAP financial measure. |
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Shuttle Tanker Segment
Cash flow from vessel operations from the Partnership’s Shuttle Tanker segment increased to $63.9 million for the second quarter of 2015 compared to $61.7 million for the same period of the prior year, primarily due to higher charter rates and more days trading in the conventional tanker spot market, and lower operating expenses due to the strengthening of the U.S. Dollar associated with foreign-denominated expenditures, the timing of maintenance programs and lower crewing expenses following a change in crew composition. These increases were partially offset by the sale of the Navion Norvegia in October 2014 to a 50 percent-owned joint venture company of the Partnership (which vessel is currently being converted into an FPSO unit) and the sale of the Navion Svenita in March 2015.
FPSO Segment
Cash flow from vessel operations from the Partnership’s FPSO segment (which also includes the results from one equity-accounted FPSO unit), increased to $49.8 million for the second quarter of 2015 compared to $40.7 million for the same period of the prior year, primarily due to lower operating expenses as a result of the strengthening of the U.S. Dollar associated with foreign-denominated expenditures, an increase in revenues from the Voyageur Spirit FPSO due to higher production during the first half of 2015 and higher revenue from the Cidade de Rio das Ostras FPSO unit due to an increase in charter rates commencing in the fourth quarter of 2014.
FSO Segment
Cash flow from vessel operations from the Partnership’s FSO segment increased to $7.9 million in the second quarter of 2015 compared to $4.0 million for the same period of the prior year, primarily due to the Suksan Salamander FSO, which commenced its charter contract in August 2014.
Conventional Tanker Segment
Cash flow from vessel operations from the Partnership’s Conventional Tanker segment of $5.6 million for the second quarter of 2015 was consistent with the same period of the prior year.
Towage Segment
Cash flow from vessel operations from the Partnership’s Towage segment of $5.0 million for the second quarter of 2015 relates to the five long-distance towing and offshore installation vessels acquired during the first half of 2015. Cash flow used for vessel operations of $2.1 million for the second quarter of 2014 primarily related to fees paid to Teekay Corporation in connection with the acquisition of ALP.
UMS Segment
Cash flow from vessel operations from the Partnership’s UMS segment of $1.9 million for the second quarter of 2015 relates to the Arendal Spirit UMS, which commenced its charter contract with Petrobras on June 7, 2015.
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Teekay Offshore’s Fleet
The following table summarizes Teekay Offshore’s fleet as of August 1, 2015.
| Number of Vessels | ||||||||||||||||
| Owned Vessels |
Chartered-in Vessels |
Committed Newbuildings / Conversions |
Total | |||||||||||||
| Shuttle Tanker Segment |
30 | (i)(ii) | 4 | 3 | (iii) | 37 | ||||||||||
| FPSO Segment |
6 | (iv) | — | 2 | (v) | 8 | ||||||||||
| FSO Segment |
6 | — | 1 | (vi) | 7 | |||||||||||
| Conventional Segment |
4 | — | — | 4 | ||||||||||||
| Towage Segment |
6 | — | 4 | (vii) | 10 | |||||||||||
| UMS Segment |
1 | — | 2 | (viii) | 3 | |||||||||||
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| Total |
53 | 4 | 12 | 69 | ||||||||||||
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| (i) | Includes six shuttle tankers in which Teekay Offshore’s ownership interest is 50 percent and one shuttle tanker in which Teekay Offshore’s ownership interest is 67 percent. |
| (ii) | Includes one HiLoad DP unit. |
| (iii) | Includes three Suezmax-size, DP2 shuttle tanker newbuildings scheduled to be delivered in the fourth quarter of 2017 through the first half of 2018 for employment under the East Coast of Canada contract. |
| (iv) | Includes one FPSO unit, the Cidade de Itajai, in which Teekay Offshore’s ownership interest is 50 percent. |
| (v) | Consists of the Petrojarl I FPSO upgrade project and Teekay Offshore’s 50 percent ownership interest in the Libra FPSO conversion project. |
| (vi) | Consists of the 67-percent owned shuttle tanker, the Randgrid, which is being converted into an FSO unit for use with the Gina Krog FSO project. |
| (vii) | Consists of four long-distance towing and offshore installation vessel newbuildings scheduled to deliver in 2016. |
| (viii) | Consists of two UMS newbuildings scheduled to deliver in the third quarter of 2016 and the second quarter of 2017. |
Liquidity and Continuous Offering Program Update
In 2013, the Partnership implemented a continuous offering program (COP) under which the Partnership may issue new common units at market prices up to a maximum aggregate amount of $100 million. As at June 30, 2015, the Partnership had sold approximately 300,000 common units under the COP, generating proceeds of approximately $10.0 million (including the Partnership’s general partner’s two percent proportionate capital contribution and net of offering costs). The Partnership did not sell any common units under the COP during the second quarter of 2015.
In April 2015, the Partnership completed a $125 million 8.5 percent perpetual preferred unit public offering, raising net proceeds of approximately $120.8 million. The net proceeds from the public offering were used for general partnership purposes, including the funding of newbuilding installments, capital conversion projects and vessel acquisitions.
In July 2015, the Partnership completed a $250 million, 8.6 percent convertible preferred unit private placement. The proceeds from the private placement were used to partially finance the acquisition of the Knarr FPSO from Teekay Corporation.
As of August 1, 2015, the Partnership had total liquidity of approximately $328 million.
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Conference Call
The Partnership plans to host a conference call on Thursday, August 6, 2015 at noon (ET) to discuss the results for the second quarter of 2015. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
| • | By dialing 1-800-505-9568 or 416-204-9271, if outside North America, and quoting conference ID code 1569103. |
| • | By accessing the webcast, which will be available on Teekay Offshore’s website at www.teekay.com (the archive will remain on the website for a period of 30 days). |
A supporting Second Quarter 2015 Earnings Presentation will also be available at www.teekay.com in advance of the conference call start time.
The conference call will be recorded and available until Thursday, August 20, 2015. This recording can be accessed following the live call by dialing 1-888-203-1112 or 647-436-0148, if outside North America, and entering access code 1569103.
About Teekay Offshore Partners L.P.
Teekay Offshore Partners L.P. is an international provider of marine transportation, oil production, storage, long-distance towing and offshore installation and maintenance and safety services to the offshore oil industry, primarily focusing on the growing deepwater offshore oil regions of the North Sea and Brazil. Teekay Offshore is structured as a publicly-traded master limited partnership (MLP) with consolidated assets of approximately $4.4 billion, comprised of 69 offshore assets, including shuttle tankers, floating production, storage and offloading (FPSO) units, floating storage and offtake (FSO) units, units for maintenance and safety (UMS), long-distance towing and offshore installation vessels and conventional tankers. The majority of Teekay Offshore’s fleet is employed on medium-term, stable contracts.
Teekay Offshore’s common units trade on the New York Stock Exchange under the symbol “TOO”.
For Investor Relations
enquiries contact:
Ryan Hamilton
Tel: +1 (604) 609-6442
Website: www.teekay.com
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Teekay Offshore Partners L.P.
Summary Consolidated Statements of Income (Loss)
(in thousands of U.S. dollars, except unit data)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2015 |
March 31, 2015 |
June 30, 2014 |
June 30, 2015 |
June 30, 2014 |
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| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| Revenues |
255,758 | 250,911 | 241,402 | 506,669 | 500,636 | |||||||||||||||
| Voyage expenses |
(20,716 | ) | (22,517 | ) | (26,256 | ) | (43,233 | ) | (59,710 | ) | ||||||||||
| Vessel operating expenses |
(77,935 | ) | (74,034 | ) | (88,184 | ) | (151,969 | ) | (176,314 | ) | ||||||||||
| Time-charter hire expense |
(10,762 | ) | (6,983 | ) | (4,975 | ) | (17,745 | ) | (16,387 | ) | ||||||||||
| Depreciation and amortization |
(53,864 | ) | (53,604 | ) | (48,474 | ) | (107,468 | ) | (96,962 | ) | ||||||||||
| General and administrative |
(14,202 | ) | (14,880 | ) | (18,054 | ) | (29,082 | ) | (32,903 | ) | ||||||||||
| (Write-down) and gain on sale of vessels |
(500 | ) | (13,853 | ) | — | (14,353 | ) | — | ||||||||||||
| Restructuring (charge) recovery |
(135 | ) | — | 821 | (135 | ) | 262 | |||||||||||||
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| Income from vessel operations |
77,644 | 65,040 | 56,280 | 142,684 | 118,622 | |||||||||||||||
| Interest expense |
(24,741 | ) | (23,183 | ) | (21,568 | ) | (47,924 | ) | (40,488 | ) | ||||||||||
| Interest income |
135 | 134 | 190 | 269 | 367 | |||||||||||||||
| Realized and unrealized gains (losses) on derivative instruments(1) |
42,282 | (51,648 | ) | (38,144 | ) | (9,366 | ) | (74,776 | ) | |||||||||||
| Equity income |
9,720 | 4,091 | 2,388 | 13,811 | 6,091 | |||||||||||||||
| Foreign currency exchange gain (loss)(2) |
2,789 | (7,076 | ) | (2,836 | ) | (4,287 | ) | (3,611 | ) | |||||||||||
| Other income – net |
388 | 259 | 72 | 647 | 462 | |||||||||||||||
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| Income (loss) before income tax expense |
108,217 | (12,383 | ) | (3,618 | ) | 95,834 | 6,667 | |||||||||||||
| Income tax expense |
(353 | ) | (845 | ) | (182 | ) | (1,198 | ) | (1,445 | ) | ||||||||||
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| Net income (loss) |
107,864 | (13,228 | ) | (3,800 | ) | 94,636 | 5,222 | |||||||||||||
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| Non-controlling interests in net income (loss) |
3,638 | 3,998 | 1,654 | 7,636 | 3,333 | |||||||||||||||
| Preferred unitholders’ interest in net income (loss) |
4,791 | 2,719 | 2,719 | 7,510 | 5,438 | |||||||||||||||
| General Partner’s interest in net income (loss) |
6,153 | 3,764 | 3,696 | 9,917 | 7,639 | |||||||||||||||
| Limited partners’ interest in net income (loss) |
93,282 | (23,709 | ) | (11,869 | ) | 69,573 | (11,188 | ) | ||||||||||||
| Weighted-average number of common units: |
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| – basic |
92,413,598 | 92,391,826 | 85,529,102 | 92,402,772 | 85,492,401 | |||||||||||||||
| – diluted |
92,457,480 | 92,391,826 | 85,529,102 | 92,470,600 | 85,492,401 | |||||||||||||||
| Total number of common units outstanding at end of period |
92,413,598 | 92,413,598 | 85,681,495 | 92,413,598 | 85,681,495 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | Realized losses on derivative instruments relate to amounts the Partnership actually paid to settle derivative instruments, and the unrealized gains (losses) on derivative instruments relate to the change in fair value of such derivative instruments, as detailed in the table below: |
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2015 |
March 31, 2015 |
June 30, 2014 |
June 30, 2015 |
June 30, 2014 |
||||||||||||||||
| Realized (losses) gains relating to: |
||||||||||||||||||||
| Interest rate swaps |
(11,775 | ) | (12,298 | ) | (13,997 | ) | (24,073 | ) | (28,060 | ) | ||||||||||
| Foreign currency forward contracts |
(2,571 | ) | (3,253 | ) | 196 | (5,824 | ) | (302 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (14,346 | ) | (15,551 | ) | (13,801 | ) | (29,897 | ) | (28,362 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Unrealized gains (losses) relating to: |
||||||||||||||||||||
| Interest rate swaps |
50,415 | (31,001 | ) | (22,985 | ) | 19,414 | (47,093 | ) | ||||||||||||
| Foreign currency forward contracts |
6,213 | (5,096 | ) | (1,358 | ) | 1,117 | 679 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 56,628 | (36,097 | ) | (24,343 | ) | 20,531 | (46,414 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total realized and unrealized gains (losses) onderivative instruments |
42,282 | (51,648 | ) | (38,144 | ) | (9,366 | ) | (74,776 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
8
- more -
| (2) | Foreign currency exchange gain (loss) includes realized losses relating to the amounts the Partnership received (paid) to settle its non-designated cross currency swaps that were entered into as an economic hedge relating to the Partnership’s Norwegian Kroner (NOK)-denominated unsecured bonds as detailed in the table below. The Partnership issued NOK 600 million of unsecured bonds in 2012 maturing in 2017, NOK 1,300 million of unsecured bonds in 2013 maturing in 2016 and 2018, and NOK 1,000 million of unsecured bonds in 2014 maturing in 2019. Foreign currency exchange gain (loss) also includes unrealized gains (losses) relating to the change in fair value of such derivative instruments, partially offset by unrealized (losses) gains on the revaluation of the NOK bonds, as detailed in the table below: |
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2015 |
March 31, 2015 |
June 30, 2014 |
June 30, 2015 |
June 30, 2014 |
||||||||||||||||
| Realized losses on cross currency swaps |
(1,953 | ) | (2,380 | ) | (38 | ) | (4,333 | ) | (22 | ) | ||||||||||
| Unrealized gains (losses) on cross currency swaps |
12,525 | (32,201 | ) | (14,267 | ) | (19,676 | ) | (6,692 | ) | |||||||||||
| Unrealized (losses) gains on revaluation of NOK bonds |
(9,512 | ) | 29,392 | 11,431 | 19,880 | 2,301 | ||||||||||||||
9
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Teekay Offshore Partners L.P.
Consolidated Balance Sheets
(in thousands of U.S. dollars)
| As at | As at | As at | ||||||||||
| June 30, 2015 | March 31, 2015 | December 31, 2014 | ||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||
| ASSETS |
||||||||||||
| Current |
||||||||||||
| Cash and cash equivalents |
242,764 | 278,846 | 252,138 | |||||||||
| Restricted cash – current |
73,700 | 69,237 | 4,704 | |||||||||
| Accounts receivable |
117,085 | 87,681 | 103,665 | |||||||||
| Vessel held for sale |
5,000 | 5,000 | — | |||||||||
| Net investments in direct financing leases – current |
5,501 | 5,224 | 4,987 | |||||||||
| Prepaid expenses |
34,503 | 26,829 | 30,211 | |||||||||
| Due from affiliates |
37,856 | 33,032 | 44,225 | |||||||||
| Advances to joint venture |
— | — | 5,225 | |||||||||
| Other current assets |
14,644 | 4,626 | 4,626 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
531,053 | 510,475 | 449,781 | |||||||||
|
|
|
|
|
|
|
|||||||
| Restricted cash – long-term |
— | 735 | 42,056 | |||||||||
| Vessels and equipment |
||||||||||||
| At cost, less accumulated depreciation |
3,274,888 | 3,076,643 | 3,010,689 | |||||||||
| Advances on newbuilding contracts and conversion costs |
252,040 | 395,945 | 172,776 | |||||||||
| Net investments in direct financing leases |
14,599 | 16,088 | 17,471 | |||||||||
| Investment in equity accounted joint ventures |
74,162 | 64,061 | 54,955 | |||||||||
| Derivative instruments |
5,240 | 1,679 | 4,660 | |||||||||
| Deferred tax asset |
5,095 | 5,054 | 5,959 | |||||||||
| Other assets |
75,224 | 52,331 | 51,362 | |||||||||
| Intangible assets – net |
5,400 | 5,655 | 6,410 | |||||||||
| Goodwill |
129,145 | 129,145 | 129,145 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
4,366,846 | 4,257,811 | 3,945,264 | |||||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES AND EQUITY |
||||||||||||
| Current |
||||||||||||
| Accounts payable |
12,902 | 11,133 | 15,064 | |||||||||
| Accrued liabilities |
120,438 | 105,739 | 68,013 | |||||||||
| Deferred revenues |
25,901 | 16,197 | 25,669 | |||||||||
| Due to affiliates |
143,742 | 125,724 | 108,941 | |||||||||
| Current portion of derivative instruments |
106,588 | 125,577 | 85,318 | |||||||||
| Current portion of long-term debt |
466,952 | 395,008 | 258,014 | |||||||||
| Current portion of in-process revenue contracts |
12,779 | 12,779 | 12,744 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
889,302 | 792,157 | 573,763 | |||||||||
|
|
|
|
|
|
|
|||||||
| Long-term debt |
2,195,010 | 2,311,922 | 2,178,009 | |||||||||
| Derivative instruments |
236,208 | 282,812 | 257,754 | |||||||||
| In-process revenue contracts |
69,450 | 72,628 | 75,805 | |||||||||
| Other long-term liabilities |
60,033 | 55,178 | 44,238 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities |
3,450,003 | 3,514,697 | 3,129,569 | |||||||||
|
|
|
|
|
|
|
|||||||
| Redeemable non-controlling interest |
10,481 | 12,059 | 12,842 | |||||||||
| Equity |
||||||||||||
| Limited partners – common units (92.4 million units issued and outstanding at June 30, 2015 and December 31, 2014, respectively) |
562,624 | 516,674 | 589,165 | |||||||||
| Limited partners – preferred units (11.0 million and 6.0 million units issued and outstanding at June 30, 2015 and December 31, 2014, respectively) |
265,613 | 144,800 | 144,800 | |||||||||
| General Partner |
20,498 | 19,560 | 21,038 | |||||||||
|
|
|
|
|
|
|
|||||||
| Partners’ equity |
848,735 | 681,034 | 755,003 | |||||||||
|
|
|
|
|
|
|
|||||||
| Non-controlling interests |
57,627 | 50,021 | 47,850 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total equity |
906,362 | 731,055 | 802,853 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities and total equity |
4,366,846 | 4,257,811 | 3,945,264 | |||||||||
|
|
|
|
|
|
|
|||||||
10
- more -
Teekay Offshore Partners L.P.
Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)
| Six Months Ended | ||||||||
| June 30, 2015 | June 30, 2014 | |||||||
| (unaudited) | (unaudited) | |||||||
| Cash and cash equivalents provided by (used for) |
||||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
94,636 | 5,222 | ||||||
| Non-cash items: |
||||||||
| Unrealized (gain) loss on derivative instruments |
(855 | ) | 53,106 | |||||
| Equity income |
(13,811 | ) | (6,091 | ) | ||||
| Depreciation and amortization |
107,468 | 96,962 | ||||||
| Write-down and (gain) on sale of vessels |
14,353 | — | ||||||
| Deferred income tax expense (recovery) |
571 | (223 | ) | |||||
| Amortization of in-process revenue contracts |
(6,320 | ) | (6,320 | ) | ||||
| Foreign currency exchange (gain) loss and other |
(39,269 | ) | 371 | |||||
| Change in non-cash working capital items related to operating activities |
15,192 | (96,617 | ) | |||||
| Expenditures for dry docking |
(5,145 | ) | (9,468 | ) | ||||
|
|
|
|
|
|||||
| Net operating cash flow |
166,820 | 36,942 | ||||||
|
|
|
|
|
|||||
| FINANCING ACTIVITIES |
||||||||
| Proceeds from long-term debt |
410,374 | 720,443 | ||||||
| Scheduled repayments of long-term debt |
(150,949 | ) | (241,223 | ) | ||||
| Prepayments of long-term debt |
(13,606 | ) | (302,413 | ) | ||||
| Debt issuance costs |
(4,554 | ) | (10,094 | ) | ||||
| Decrease in restricted cash |
15,140 | — | ||||||
| Proceeds from issuance of common units |
— | 7,784 | ||||||
| Proceeds from issuance of preferred units |
125,000 | — | ||||||
| Expenses relating to equity offerings |
(4,187 | ) | (153 | ) | ||||
| Cash distributions paid by the Partnership |
(115,460 | ) | (107,197 | ) | ||||
| Settlement of contingent consideration liability |
(3,303 | ) | — | |||||
| Cash distributions paid by subsidiaries to non-controlling interests |
(5,720 | ) | (5,718 | ) | ||||
| Equity contribution from joint venture partner |
5,500 | 22,017 | ||||||
| Indemnification on Voyageur Spirit FPSO from Teekay Corporation |
— | 3,474 | ||||||
| Other |
579 | 397 | ||||||
|
|
|
|
|
|||||
| Net financing cash flow |
258,814 | 87,317 | ||||||
|
|
|
|
|
|||||
| INVESTING ACTIVITIES |
||||||||
| Expenditures for vessels and equipment, including advances on newbuilding contracts and conversion costs |
(404,033 | ) | (92,084 | ) | ||||
| Increase in restricted cash(1) |
(42,080 | ) | — | |||||
| Proceeds from sale of vessels and equipment |
8,918 | — | ||||||
| Repayment from joint ventures |
5,225 | — | ||||||
| Direct financing lease payments received |
2,358 | 2,582 | ||||||
| Investment in equity accounted joint ventures |
(5,396 | ) | — | |||||
| Acquisition of ALP Maritime Services B.V. (net of cash acquired of $0.3 million) |
— | (2,322 | ) | |||||
|
|
|
|
|
|||||
| Net investing cash flow |
(435,008 | ) | (91,824 | ) | ||||
|
|
|
|
|
|||||
| (Decrease) increase in cash and cash equivalents |
(9,374 | ) | 32,435 | |||||
| Cash and cash equivalents, beginning of the period |
252,138 | 219,126 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of the period |
242,764 | 251,561 | ||||||
|
|
|
|
|
|||||
| (1) | Increase in restricted cash for the six months ended June 30, 2015 relates to cash held in escrow related to a holdback on the purchase price of five towing and offshore installation vessels during the period. |
11
- more -
Teekay Offshore Partners L.P.
Appendix A – Specific Items Affecting Net Income (Loss)
(in thousands of U.S. dollars)
Set forth below is a reconciliation of the Partnership’s unaudited adjusted net income attributable to the partners, a non-GAAP financial measure, to net income (loss) attributable to the partners as determined in accordance with GAAP. The Partnership believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Partnership’s financial performance. The items below are also typically excluded by securities analysts in their published estimates of the Partnership’s financial results. Adjusted net income attributable to the partners is intended to provide additional information and should not be considered a substitute for measures of performance prepared in accordance with GAAP.
| Three Months Ended | ||||||||
| June 30, 2015 | June 30, 2014 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net income (loss) – GAAP basis |
107,864 | (3,800 | ) | |||||
| Adjustments: |
||||||||
| Net income attributable to non-controlling interests |
(3,638 | ) | (1,654 | ) | ||||
|
|
|
|
|
|||||
| Net income (loss) attributable to the partners |
104,226 | (5,454 | ) | |||||
| Add (subtract) specific items affecting net income (loss): |
||||||||
| Foreign currency exchange (gains) losses(1) |
(4,742 | ) | 2,798 | |||||
| Unrealized (gains) losses on derivative instruments(2) |
(63,365 | ) | 25,237 | |||||
| Write-down and (gain) on sale of vessels(3) |
500 | — | ||||||
| Pre-operational costs(4) |
2,354 | — | ||||||
| Acquisition, restructuring charges and other (5) |
135 | 779 | ||||||
| Non-controlling interests’ share of items above(6) |
342 | 401 | ||||||
|
|
|
|
|
|||||
| Total adjustments |
(64,776 | ) | 29,215 | |||||
|
|
|
|
|
|||||
| Adjusted net income attributable to the partners |
39,450 | 23,761 | ||||||
|
|
|
|
|
|||||
| (1) | Foreign currency exchange (gains) losses primarily relate to the Partnership’s revaluation of all foreign currency-denominated monetary assets and liabilities based on the prevailing exchange rate at the end of each reporting period and unrealized gains or losses related to the Partnership’s cross currency swaps for outstanding Norwegian bonds of the Partnership and excludes the realized gains and losses relating to the cross currency swaps. |
| (2) | Reflects the unrealized (gains) losses due to changes in the mark-to-market value of interest rate swaps and foreign exchange forward contracts that are not designated as hedges for accounting purposes, including the unrealized mark-to-market value of the interest rate swaps within the Cidade de Itajai FPSO and Libra FPSO equity accounted joint ventures. |
| (3) | Write-down and (gain) on sale of vessels for the three months ended June 30, 2015 includes the expiration of one UMS newbuilding order option. |
| (4) | Reflects the realized gains (losses) on interest rate swaps and foreign currency forward contracts relating to upgrade costs on the Petrojarl 1 FPSO unit, conversion costs on the Gina Krog FSO project and construction costs on the Arendal Spirit UMS, as well as depreciation and amortization expense relating to the Petrojarl 1 FPSO unit while undergoing conversion. |
| (5) | Other items for the three months ended June 30, 2015 relates to seafarer redundancy costs. Other items for the three months ended June 30, 2014 primarily includes fees of $1.6 million associated with the Partnership’s acquisition of ALP and a restructuring charge reimbursement of $0.8 million relating to the reorganization of the Partnership’s shuttle tanker marine operations, which were completed by June 2013. |
| (6) | Items affecting net income (loss) include items from the Partnership’s consolidated non-wholly-owned subsidiaries. The specific items affecting net income (loss) are analyzed to determine whether any of the amounts originated from a consolidated non-wholly-owned subsidiary. Each amount that originates from a consolidated non-wholly-owned subsidiary is multiplied by the non-controlling interests’ percentage share in this subsidiary to arrive at the non-controlling interests’ share of the amount. The amount identified as “non-controlling interests’ share of items above” in the table above is the cumulative amount of the non-controlling interests’ proportionate share of items listed in the table. |
12
- more -
Teekay Offshore Partners L.P.
Appendix B – Reconciliation of Non-GAAP Financial Measure
Distributable Cash Flow
(in thousands of U.S. dollars)
Distributable cash flow represents net income (loss) adjusted for depreciation and amortization expense, non-controlling interests, non-cash items, distributions relating to equity financing of newbuilding installments, distributions on our preferred units, vessel and business acquisition costs, pre-operational costs, estimated maintenance capital expenditures, gain on sale and write-down of vessels, unrealized gains and losses from derivatives, non-cash income taxes and unrealized foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership’s capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Distributable cash flow is not defined by GAAP and should not be considered as an alternative to net income (loss) or any other indicator of the Partnership’s performance required by GAAP. The table below reconciles distributable cash flow to net income (loss) for the quarters ended June 30, 2015 and June 30, 2014, respectively.
| Three Months Ended | ||||||||
| June 30, 2015 | June 30, 2014 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net income (loss) |
107,864 | (3,800 | ) | |||||
|
|
|
|
|
|||||
| Add (subtract): |
||||||||
| Depreciation and amortization |
53,864 | 48,474 | ||||||
| Distributions relating to equity financing of newbuildings and conversion costs |
5,433 | 2,184 | ||||||
| Partnership’s share of equity accounted joint venture’s distributable cash flow net of estimated maintenance capital expenditures(1) |
4,143 | 4,292 | ||||||
| Write-down of vessel |
500 | — | ||||||
| Distributions relating to preferred units |
(4,791 | ) | (2,719 | ) | ||||
| Equity income from joint ventures |
(9,720 | ) | (2,388 | ) | ||||
| Estimated maintenance capital expenditures(1) |
(29,483 | ) | (28,354 | ) | ||||
| Unrealized (gains) losses on derivative instruments(2) |
(56,628 | ) | 24,343 | |||||
| Foreign currency exchange and other, net |
(6,819 | ) | 2,517 | |||||
|
|
|
|
|
|||||
| Distributable Cash Flow before Non-Controlling Interests |
64,363 | 44,549 | ||||||
| Non-controlling interests’ share of DCF |
(6,092 | ) | (4,412 | ) | ||||
|
|
|
|
|
|||||
| Distributable Cash Flow |
58,271 | 40,137 | ||||||
|
|
|
|
|
|||||
| Total Distributions |
55,019 | 51,011 | ||||||
|
|
|
|
|
|||||
| Coverage Ratio(3) |
1.06 | 0.79 | ||||||
|
|
|
|
|
|||||
| (1) | Estimated maintenance capital expenditures relating to the Partnership’s equity accounted joint venture for the three months ended June 30, 2015 and 2014 were $1.0 million and $1.0 million, respectively. |
| (2) | Derivative instruments include interest rate swaps and foreign exchange forward contracts. |
| (3) | Coverage ratio represents distributable cash flow divided by total distributions. |
13
- more -
Teekay Offshore Partners L.P.
Appendix C – Reconciliation of Non-GAAP Financial Measure
Net Revenues
(in thousands of U.S. dollars)
Net revenues represents revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies, however, it is not required by GAAP and should not be considered as an alternative to revenues or any other indicator of the Partnership’s performance required by GAAP.
| Three Months Ended June 30, 2015 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
UMS Segment(1) |
Total | ||||||||||||||||||||||
| Revenues |
132,900 | 86,246 | 14,165 | 8,245 | 10,516 | 3,686 | 255,758 | |||||||||||||||||||||
| Voyage expenses |
(18,975 | ) | — | (90 | ) | (647 | ) | (1,004 | ) | — | (20,716 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net revenues |
113,925 | 86,246 | 14,075 | 7,598 | 9,512 | 3,686 | 235,042 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Three Months Ended June 30, 2014 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
Total | |||||||||||||||||||||||
| Revenues |
137,042 | 83,984 | 11,673 | 8,600 | 103 | 241,402 | ||||||||||||||||||||||
| Voyage expenses |
(24,913 | ) | — | (149 | ) | (1,188 | ) | (6 | ) | (26,256 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net revenues |
112,129 | 83,984 | 11,524 | 7,412 | 97 | 215,146 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (1) | The Partnership acquired 100% of the outstanding shares of Logitel Offshore Holding AS during the third quarter of 2014 and operations began in the second quarter of 2015. |
14
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Teekay Offshore Partners L.P.
Appendix D – Supplemental Segment Information
(in thousands of U.S. dollars)
| Three Months Ended June 30, 2015 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
UMS Segment(1) |
Total | ||||||||||||||||||||||
| Net revenues (See Appendix C) |
113,925 | 86,246 | 14,075 | 7,598 | 9,512 | 3,686 | 235,042 | |||||||||||||||||||||
| Vessel operating expenses |
(31,125 | ) | (33,556 | ) | (6,921 | ) | (1,514 | ) | (3,696 | ) | (1,123 | ) | (77,935 | ) | ||||||||||||||
| Time-charter hire expense |
(10,762 | ) | — | — | — | — | — | (10,762 | ) | |||||||||||||||||||
| Depreciation and amortization |
(26,795 | ) | (19,844 | ) | (2,974 | ) | (1,676 | ) | (2,174 | ) | (401 | ) | (53,864 | ) | ||||||||||||||
| General and administrative |
(6,788 | ) | (5,011 | ) | (420 | ) | (507 | ) | (837 | ) | (639 | ) | (14,202 | ) | ||||||||||||||
| Write-down of vessel |
— | — | — | — | — | (500 | ) | (500 | ) | |||||||||||||||||||
| Restructuring charge |
(135 | ) | — | — | — | — | — | (135 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income from vessel operations |
38,320 | 27,835 | 3,760 | 3,901 | 2,805 | 1,023 | 77,644 | |||||||||||||||||||||
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| Three Months Ended June 30, 2014 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
Total | |||||||||||||||||||||||
| Net revenues (See Appendix C) |
112,129 | 83,984 | 11,524 | 7,412 | 97 | 215,146 | ||||||||||||||||||||||
| Vessel operating expenses |
(39,715 | ) | (39,472 | ) | (7,532 | ) | (1,465 | ) | — | (88,184 | ) | |||||||||||||||||
| Time-charter hire expense |
(4,975 | ) | — | — | — | — | (4,975 | ) | ||||||||||||||||||||
| Depreciation and amortization |
(27,378 | ) | (18,186 | ) | (1,298 | ) | (1,612 | ) | — | (48,474 | ) | |||||||||||||||||
| General and administrative |
(6,532 | ) | (7,989 | ) | (1,027 | ) | (312 | ) | (2,194 | ) | (18,054 | ) | ||||||||||||||||
| Restructuring recovery |
821 | — | — | — | — | 821 | ||||||||||||||||||||||
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| Income from vessel operations |
34,350 | 18,337 | 1,667 | 4,023 | (2,097 | ) | 56,280 | |||||||||||||||||||||
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| (1) | The Partnership acquired 100% of the outstanding shares of Logitel Offshore Holding AS during the third quarter of 2014 and operations began in the second quarter of 2015. |
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Teekay Offshore Partners L.P.
Appendix E – Reconciliation of Non-GAAP Financial Measure
Cash Flow From Vessel Operations From Consolidated Vessels
(in thousands of U.S. dollars)
Cash flow from vessel operations from consolidated vessels represents income from vessel operations before depreciation and amortization expense, write-down of vessels and amortization of deferred gains, and includes the realized gains and losses on the settlement of foreign exchange forward contracts and adjustments for direct financing leases to a cash basis. Cash flow from vessel operations is included because certain investors use this data to measure a company’s financial performance. Cash flow from vessel operations is not required by GAAP and should not be considered as an alternative to net income (loss) or any other indicator of the Partnership’s performance required by GAAP.
| Three Months Ended June 30, 2015 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
UMS Segment(1) |
Total | ||||||||||||||||||||||
| Income from vessel operations (See Appendix D) |
38,320 | 27,835 | 3,760 | 3,901 | 2,805 | 1,023 | 77,644 | |||||||||||||||||||||
| Depreciation and amortization |
26,795 | 19,844 | 2,974 | 1,676 | 2,174 | 401 | 53,864 | |||||||||||||||||||||
| Realized losses from the settlements of non-designated foreign exchange forward contracts |
(1,262 | ) | (1,309 | ) | — | — | — | — | (2,571 | ) | ||||||||||||||||||
| Amortization of non-cash portion of revenue contracts |
— | (3,177 | ) | — | — | — | — | (3,177 | ) | |||||||||||||||||||
| Write-down of vessel |
— | — | — | — | — | 500 | 500 | |||||||||||||||||||||
| Falcon Spirit revenue accounted for as direct financing lease |
— | — | (942 | ) | — | — | — | (942 | ) | |||||||||||||||||||
| Falcon Spirit cash flow from time-charter contracts |
— | — | 2,153 | — | — | — | 2,153 | |||||||||||||||||||||
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| Cash flow from vessel operations from consolidated vessels |
63,853 | 43,193 | 7,945 | 5,577 | 4,979 | 1,924 | 127,471 | |||||||||||||||||||||
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| Three Months Ended June 30, 2014 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Shuttle Tanker Segment |
FPSO Segment |
FSO Segment |
Conventional Tanker Segment |
Towage Segment |
Total | |||||||||||||||||||||||
| Income from vessel operations (See Appendix D) |
34,350 | 18,337 | 1,667 | 4,023 | (2,097 | ) | 56,280 | |||||||||||||||||||||
| Depreciation and amortization |
27,378 | 18,186 | 1,298 | 1,612 | — | 48,474 | ||||||||||||||||||||||
| Realized (losses) gains from the settlements of non-designated foreign exchange forward contracts |
(64 | ) | 260 | — | — | — | 196 | |||||||||||||||||||||
| Amortization of non-cash portion of revenue contracts |
— | (3,177 | ) | — | — | — | (3,177 | ) | ||||||||||||||||||||
| Falcon Spirit revenue accounted for as direct financing lease |
— | — | (1,141 | ) | — | — | (1,141 | ) | ||||||||||||||||||||
| Falcon Spirit cash flow from time-charter contracts |
— | — | 2,142 | — | — | 2,142 | ||||||||||||||||||||||
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| Cash flow from (used for) vessel operations from consolidated vessels |
61,664 | 33,606 | 3,966 | 5,635 | (2,097 | ) | 102,774 | |||||||||||||||||||||
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| (1) | The Partnership acquired 100% of the outstanding shares of Logitel Offshore Holding AS during the third quarter of 2014 and operations began in the second quarter of 2015. |
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Teekay Offshore Partners L.P.
Appendix F – Reconciliation of Non-GAAP Financial Measure
Cash Flow From Vessel Operations From Equity Accounted Vessel
(in thousands of U.S. dollars)
Cash flow from vessel operations from equity accounted vessel represents income from vessel operations before depreciation and amortization expense. Cash flow from equity accounted vessel represents the Partnership’s proportionate share of cash flow from vessel operations from its equity-accounted vessel, the Cidade de Itajai FPSO unit. Cash flow from vessel operations from equity accounted vessel is included because certain investors use cash flow from vessel operations to measure a company’s financial performance, and to highlight this measure for the Partnership’s equity accounted joint ventures. Cash flow from vessel operations from equity accounted vessel is not required by GAAP and should not be considered as an alternative to equity income or any other indicator of the Partnership’s performance required by GAAP.
| Three Months Ended June 30, 2015 |
Three Months Ended June 30, 2014 |
|||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| At 100% |
Partnership’s 50% |
At 100% |
Partnership’s 50% |
|||||||||||||
| Voyage revenues |
20,174 | 10,087 | 20,838 | 10,419 | ||||||||||||
| Vessel and other operating expenses |
(6,915 | ) | (3,458 | ) | (6,568 | ) | (3,284 | ) | ||||||||
| Depreciation and amortization |
(4,422 | ) | (2,211 | ) | (4,717 | ) | (2,359 | ) | ||||||||
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| Income from vessel operations of equity accounted vessel |
8,837 | 4,418 | 9,553 | 4,776 | ||||||||||||
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| Net interest expense |
(1,650 | ) | (825 | ) | (2,044 | ) | (1,022 | ) | ||||||||
| Realized and unrealized gains (losses) on derivative instruments(1) |
12,269 | 6,135 | (2,646 | ) | (1,323 | ) | ||||||||||
| Foreign currency exchange gain |
— | — | 150 | 75 | ||||||||||||
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| Total other items |
10,619 | 5,310 | (4,540 | ) | (2,270 | ) | ||||||||||
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| Net income / equity income of equity accounted vessel before income tax expense |
19,456 | 9,728 | 5,013 | 2,506 | ||||||||||||
| Income tax expense |
(16 | ) | (8 | ) | (237 | ) | (118 | ) | ||||||||
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| Net income / equity income of equity accounted vessel |
19,440 | 9,720 | 4,776 | 2,388 | ||||||||||||
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| Income from vessel operations of equity accounted vessel |
8,837 | 4,418 | 9,553 | 4,776 | ||||||||||||
| Depreciation and amortization |
4,422 | 2,211 | 4,717 | 2,359 | ||||||||||||
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| Cash flow from vessel operations from equity accounted vessel |
13,259 | 6,629 | 14,270 | 7,135 | ||||||||||||
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| (1) | Realized and unrealized gains (losses) on derivative instruments for the three months ended June 30, 2015 includes the Partnership’s 50% share of a total unrealized gain of $11.6 million related to an interest rate swap for the Libra FPSO conversion project. |
17
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Forward Looking Statements
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements regarding: a potential cash distribution increase in the third quarter of 2015; the impact of the Knarr FPSO, the Partnership’s first UMS and the acquired towage vessels on the Partnership’s distributable cash flow; the accretive nature of the Knarr FPSO acquisition; the offshore market growth potential in the East Coast of Canada; the impact of the East Coast Canada shuttle tanker project on the Partnership’s distributable cash flow; the Partnership’s expected future revenues and remaining average contract duration; fundamentals in the offshore industry; the timing of newbuilding, conversion and upgrade vessel or offshore unit deliveries and commencement of their respective charter contracts; the estimated cost of building vessels; the Partnership’s access to competitive bank financing and multiple capital markets; and the impact of growth projects on the Partnership’s distributable cash flow. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: vessel operations and oil production volumes; significant changes in oil prices; variations in expected levels of field maintenance; increased operating expenses; different-than-expected levels of oil production in the North Sea, Brazil and East Coast of Canada offshore fields; potential early termination of contracts; shipyard delivery or vessel conversion and upgrade delays and cost overruns; changes in exploration, production and storage of offshore oil and gas, either generally or in particular regions that would impact expected future growth; delays in the commencement of time-charters; failure by the Partnership’s Board of Directors to approve future distribution increases; failure to obtain required approvals by the Conflicts Committee of Teekay Offshore’s general partner to approve the acquisition of vessels offered from Teekay Corporation, or third parties; the Partnership’s ability to raise adequate financing to purchase additional assets and complete organic growth projects; and other factors discussed in Teekay Offshore’s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2014. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
18
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